Ownership of Common Areas/Control

Started by MaureenM1 • 11 replies • 1156 views

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MaureenM1 (PA)
Posts: 344

Posted:

Our builder recently told the township (when questioned about why there is not an adequate recycling program in our development) that he has turned over ownership of the common areas to the Association.

When I emailed our management company to question this she responded that the builder did not turn over any control and he has the final say on "everything".

Our Declaration states that "Not later than earlier of seven years after the date of the recording of the Declaration, or 180 days after 75% of the units have been conveyed to unit owners including declarant shall elect a new five member board.

Any input or advice from people who have taken control of their development would be appreciated. My neighbor and I are new board members and are trying to understand the process.

JosephW (Michigan)
Posts: 882

Posted:

This is two different things: one is ownership of the common areas and the second is the control of the association, so the statements may be true, the association now owns all of the common areas, but the developer has retained control of the association. Control of the association takes place following the transition meeting wherein owners gain a majority vote on the board. Do a search of "transition" on this site and you'll find tons of stuff.

Joe

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BruceF1 (Connecticut)
Posts: 2,535

Posted:

I agree with Joe's answer, but I'm not sure what that has to do with the excuse for not having a recycling program. It seems to me that if the association is required to have a recycling program, then that's more an issue for the entity that controls the association and not the entity that owns the common areas. Sounds to me like the builder is blowing smoke.

MaryA1 (Arizona)
Posts: 7,043

Posted:

I'm wondering if the builder just told the township officials the HOA has ownership of the common areas (meaning he's no longer in control) just to get them off his back about the recycling program. The program would most likely be administered by the HOA.

DonnaS (Tennessee)
Posts: 5,671

Posted:

What amazes me is that the City, Town or County that this HOA is in has not required a recycle program from the association. Having lived in Fl, Wisc and Tn, every place has manditory recycling. I know that not every place has but how about looking into it from another angle. Poo on the Developer when it comes to this matter.

MaureenM1 (PA)
Posts: 344

Posted:

We WISH the builder no longer had control, but he is definitely in control until 75% of the homes are sold or for seven years (which ever comes first). I think we have about two more years or 3 more homes are sold, however, in this market that could take a long time. It's a 40 home development and 14 homes still need to be built and sold. The builders sons own 7 of the existing homes and rent 6 (1 is the model).

I really don't see how we will ever be able to take control from the builder at this rate. Even if 30 homes were sold (which is 75%) it is not stated in our declaration how many votes per lot the builder has (which could be 1 to 3 votes), his sons own 7 homes and there are 19 owners not related to his the builder. We will never have enough votes to take control. Even after 7 years it would depend on how many homes are sold and how many lots are left and we still may not have the votes. In this economy the builder is may be building the remainder of the homes and keeping them under his ownership and renting. If he does that we will NEVER be able to take control of the development.

Not sure what if anything could be done.....

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Maureen,
Tell us a little about you home owners, how many votes total, how many homeowner votes, how many developer votes.

Has your owners got together and sat at the table with this developer? It is important that this attempt be made and records kept. It seems you are in a hard place but you never know what is around the bend and if your owners can show a concern for the community and a concern for their own well being, this may prove helpful in the future if records are kept. I think the developer needs to know there is a force to be reconded with, you may not have a lot of power but image means a lot and if you all form a group and put your best foot forward, you may get lucky and get the brass ring. If you all just sit back and watch the world go by, you have nothing to stand on if you get the chance. It will be a tough old job but, it could well be you will make some friends and involve everyone and that is more better. Business like developer don't want the sun shining on them except when it sell property. It could be a cooperative effort to get the association and sell the property might happen.

MaureenM1 (PA)
Posts: 344

Posted:

Robert,

Myself and my neighbor are newly elected board members(all owners voted for us except the builders sons who own 7 of the 26 units sold.)
We had this voted when we were 25% sold (it was overdue but we pushed to get the quorum together to do it and succeeded).

I have meetings on a quarterly basis, so we know all the owners. So far we had four meetings. I and my neighbor are in constant dialogue with the management company and all of the owners. All owners are on the same page and want the same things for the future of this development. Most of the people who live here have downsized their homes and are invested 100 percent in this development.

We are a 40 unit townhome development. There are 19 owners, excluding 7 that are owned by the developer's sons. 6 of the homes that the developer's sons own are rented (the only rentals in the development) , the model (which the sons own is the model). total sold is 26.

There are 14 more towhomes to sell (which is going slow) due to the market. However, three were closed on since October. The development started in 2005. The builder has changed the design of 12 of the townhomes (he made a smaller model) in hopes to sell them quicker.

There is 1 vote per unit including the builder's sons units. The question that we don't know the answer to is how many votes each lot that the declarant (builder) is entitled to. I have heard from other people on the HOA website it could be one, three or more. The CCR's do not state how many votes the declarants lots have. Just says "as many votes as declarant is entitled to" If it is one then we have a chance of taking control once we reach 30 homes sold, if it is more than we have no chance in the near future to get control.

That is our predicament. Any advice you can give me would be greatly appreciated.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Maureen,

I know we discussed this quite thoroughly on another thread you initiated awhile back. However. . .

1) While the developer is in control of the assn, he has one or more votes (depending upon what your docs say) for each unsold lot. If he purchases any of the lots he would have one vote for each individually owned lot.

2) After the developer turns control of the assn over to the member, he becomes a Class B member (the same as all the property owners in the assn) and has only one vote per unsold lot and one vote for each lot he may own individually.

Many assn docs allow for the builder to have more than one vote (usually 3) for each unsold lot. This gives assurance that he will maintain control (vote-wise) of the HOA as long as he is still the declarant. Once turnover occurs, he only has one vote per unsold lot and no longer is in control of the assn (vote-wise).

MaureenM1 (PA)
Posts: 344

Posted:

Mary,

I was asked by Robert in Arizona a question and I answered it. I know I have discussed this before...

I am new at all this and as a newly elected Board Member trying to understand it all.

Maureen

MaryA1 (Arizona)
Posts: 7,043

Posted:

Maureen,

No problem. I didn't mean to criticize; only wanted to refresh everyone's memory. :-)

MaureenM1 (PA)
Posts: 344

Posted:

I appreciate your advice. Just trying to absorb and understand it all.

Maureen

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